End of the Jim and Jim Show

On Monday, December 7, SAS EVP and CMO Jim Davis resigned to take “a leadership role” at Informatica.  Davis was effectively the second in command at SAS since 2001, and widely seen as next in line of succession when owner and CEO Jim Goodnight decides to sell, retire or exit in some other fashion.

“Highly marketable people get job opportunities presented to them all the time,” said SAS spokeswoman Shannon Heath in a statement for The News & Observer.  “This was obviously an opportunity that he felt strongly about and we wish him the best in that and appreciate all of his contributions.

Uh-huh.

On the WRAL TechWire blog, Rick Smith opines that the loss of Davis is a “crushing blow” for SAS.  SAS pushed back against that post, while Smith wondered what sort of role Davis would take.

A “crushing blow?”  There’s only one person at SAS whose departure will blow the place up.  I remember hearing Jim Goodnight speak about ten years ago; he spoke for fifteen minutes, without notes, about the business.  The audience loved it.  Jim Davis was next on the agenda; he delivered about a hundred professionally produced Powerpoint slides, complete with animated pyramids and such.  For more than an hour he went on and on, talking nonsense, while the back half of the auditorium headed for the exits.

In an interview with Smith, Davis disclosed that he will be the EVP and CMO of Informatica.  According to Smith, Davis says that even though he will have the same title at Informatica, which is a third the size of SAS, he “does not see it as a lateral move.”  He also said that he would not have gone to work for a direct competitor of SAS, and he “did not see Informatica and SAS as direct competitors” even though SAS earns a quarter of its revenue from data quality and ETL software.

Perhaps we should call Davis “Baghdad Jim.”

Personally, I suspect that Davis was toast from the day about a year ago when Goodnight had to walk back a prediction of double-digit sales growth in 2014.  (Revenue actually grew 2%).

As a rule, CMOs do not walk or get axed when the topline looks good.  It’s possible that Davis’ departure is just what SAS says it is, a personal decision.  It’s also possible that SAS will post ugly numbers for 2015.  We should know by the end of the month.

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8 comments

  • Interesting insights and perspectives Tom. I too have watched the SAS succession journey play out for far too many years now and see it finally drawing to an end in the near future. While not perfect as a leader by any measure, Jim Davis was the clear heir apparent for some time. Having seen off all other candidates he was known to all as Dr. Goodnights’ successor. Therein lies the rub; Jim Goodnight does not plan on retiring or handing over the reigns of his company to anyone, least of which a marketing guy. SAS will live or die based on his view of the world (a very bigoted and racist one if you want my opinion) and leadership approach. If SAS had gone public some time back as planned it would be a different organization today; one with much different leadership and a strategy that is not based solely on exploiting the installed base as an annuity stream. It will be very sad when it all comes to an end, but without dissident shareholders or an activist board, SAS remains one man’s empire with accountability only to himself.

    • Richard,

      Thanks for reading. Appreciate your comments

      Personally, I never bought into the notion that Goodnight was grooming Davis as a successor. The impression I had was that Goodnight tolerated Davis because he was unthreatening and served a useful purpose.

      I can think of four possible explanations for the exit:

      (1) Davis’s move is exactly what SAS says it is.
      (2) 2015 numbers are below expectations and Davis is the scapegoat.
      (3) Davis challenged Goodnight on some issue and got whacked
      (4) Goodnight wants to groom new faces as his successor

      Note that these are not mutually exclusive possibilities.

      The odds that (1) is true are extremely low, for the reasons noted in the post.

      I suspect a combination of (2) and (3).

      (4) is the optimistic view.

      • It will be an interesting race to the bottom as SAS becomes completely irrelevant in the future when all of the SAS coders out there retire or convert their code to one of the many other options out there. The difficulty with succession planning is that you have to pull it off before the Founder(s) crater the company.

  • SAS technology will be relevant for a long time, just as we still have mainframes and COBOL.

    Doubtful that Goodnight will completely crater the company while he’s alive, but on his death it will be sold, most likely to a private equity investor who will slash headcount and maximize the value of that annuity stream.

    SAS’ strategic problem is a product portfolio that should be managed as a cash cow, but the company is staffed and organized like a growth company. Teradata has the same problem, and the solution will be the same.

    BTW — did I see you on a list of top people to follow?

    • I concur with your observations on both vendors. I am not sure that PE (whatever that is these days) can do much with either of them. Old dogs just cannot learn new tricks! We will just have to wait and see.

      Yes, I do seem to pop up on these “influencer lists”, but it never materializes into any work for me. I just keep buggering on providing my contrarian viewpoints.

      Cheers,

      • In both cases, PE will slash headcount, support existing customers, sort through the product portfolio to weed out the dogs, kill development of new products that invariably fail and so forth. As existing users retire and/or die, companies will gradually switch over to alternatives.

        It’s not a growth strategy, but it’s a viable business strategy.

  • My opinion on PE has become a bit more dour than yours. I see them as coming in, loading up the company w/debt, moving the company to a tax haven, raiding the Treasury, underfunding pension & 401k contributions, cutting off the arms, legs and head of the company and then filing bankruptcy before skipping town. Not a viable business strategy unless you aspire to be a thief.

    • There’s that possibility. On the other hand, CA and Infor manage to keep old dogs alive. Either way, though, for SAS customers there is uncertainty ahead — the only question is how far ahead.

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